The CBO said Wednesday the federal budget deficit over the next decade will be smaller than previously forecast as the government continues to benefit from low borrowing costs. The Fed has held short-term interest rates near zero since late 2008 and is buying bonds to lower long-term rates.

Also helping to narrow the budget gap are the Fed’s growing payments to the Treasury Department, called remittances. The Fed is required to use its income to cover its operating expenses and send much of the rest to the Treasury’s general fund, where it is used to pay government bills and benefits. The central bank’s income has surged in recent years as it earns interest on its growing bond holdings.

CBO expects the remittances to jump by 33% this year “owing to increases in both the size of the Federal Reserve’s portfolio of securities and the return on that portfolio.”

The CBO said the deficit through 2024 is expected to be more than $400 billion smaller than forecast in an April report.

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